Stalemale on Trade Protectionism Continues

Naveen Garg

International trade development is a primary concern for economic recovery. The G20 has attempted to encourage the enhancement of international trade in a responsible and inclusive way since the global financial crisis. Flexible and unencumbered trade is necessary for global economic growth; however, trade protectionist practices continue to haunt the global economy, even by the countries that advocate freer trade.

In past years, talks for creating policies to curb trade protectionism have not made much progress at the WTO and among the G20 leaders. Roberto Azevedo, the new Director General of WTO, stated that there have been no significant trade negotiations in most of past two decades.

Simon J. Evenett, a professor at St. Gallen in Switzerland, argues that in the last 5 years since the G20 pledged a standstill against protectionist initiatives, the world has actually gone backwards (Evenett 2013). In the absence of direction and leadership, trade protectionism is becoming more and more common since the financial crisis hit in the last decade. As per the 14th report of the Global Trade Alert, created by Evenett, the G20 countries have implemented 1,527 protectionist measures since the standstill agreement (Evenett S. 2013).

The new Director-General of WTO, a seasoned diplomat, told Brazilian reporters in an interview shortly after his selection for the top job at WTO that protectionism is on the decline. He also mentioned that 20% of the protectionist measures created in 2008 are already inactive (Rapoza 2013). However, an important point to note is that the issue is not only the measures implemented in 2008 but also those that have come into effect since then. Data has shown that protectionism has gained new momentum in recent years.

Trade protectionism is part of the core agenda of G20 in St. Petersburg, as it has been in all other earlier summits. In the White Book published by the Business 20 (B20) to provide recommendations to the G20 leaders, enhancing multilateral trade was a key recommendation of the B20, for example extending the deadline for standstill and monitoring protectionism after 2014. The B20 also urged the G20 to leverage the information gathered through monitoring to pave a way to eliminate protectionist measures. Consolidation of efforts to rollback such measures is highlighted as an important task.

In particular, B20 recommended the following actions:

Support the creation of a WTO non-tariff barriers mediation mechanism at the Bali WTO Ministerial Conference;

Support the continuation of the WTO rules on subsidies and on anti-subsidy measures in particular, and the update of export credits insurance rules at the WTO conference in Bali;

Limit intellectual property right violations that undermine a company’s investment in technology and innovation by better enforcing the WTO rules on Trade-related Intellectual Property (TRIPs);

G20 leaders should mandate the OECD, WTO, and UNCTAD to expand the current framework of the monitoring report to not just list the protectionist measures, but also regularly include an “impact assessment” to demonstrate their impact on trade flows, GDP, jobs, investment and time to market of consumer goods;

Create a data bank that collates all measures dating back to pre-crisis period in all G20 countries; and

G20 leaders should call to expand the monitoring report with separate sections on regulatory and standards measures (i.e. nontariff measures — NTMs) which influence trade flows, to make these measures more public and transparent.

The G20 Summit concluded in St. Petersburg, overshadowed by the ongoing Syrian crisis. With limited capacity to discuss the original G20 agenda, the issue of trade protectionism received just a brief mention in the concluding remarks of the Russian president Mr. Vladimir Putin. He called for resisting protectionism and also to develop regional trade agreements that are compatible with the WTO.

In a separate briefing, trade experts emphasized that until the Doha Round negotiations make any progress, developing a multilateral agreement will be difficult. They urged WTO members to seize the opportunity at the WTO Ministerial Conference in Bali to sign at least the trade facilitation agreement . They argued that having an agreement in place for trade facilitation will pave a way for an agreement on the other components of a large scale multilateral trade agreement, including possibly agriculture, manufacturing, and services. It was also highlighted that the WTO has to step up and lead regional initiatives so that a common theme and language is included in the agreements.

Based on the outcomes of the St. Petersburg G20 summit, we can infer that the importance of curbing trade protectionism remains unquestioned by the leaders and experts. However, considering the differences in opinion of the countries, prolonged financial distress and critical political challenges in some parts of the world, the matter of protectionism might continue to receive only limited attention.